UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported): February
4, 2013
Humana
Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or Other Jurisdiction of Incorporation)
1-5975 |
61-0647538 |
(Commission File Number) |
(IRS Employer Identification No.) |
500 West Main Street, Louisville, KY |
40202 |
(Address of Principal Executive Offices) | (Zip Code) |
502-580-1000
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2.
below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
Item
7.01 Regulation FD Disclosure.
An earnings release was issued by Humana Inc. this morning reporting financial results for the period ended December 31, 2012 and guidance for 2013, a copy of which is attached hereto as Exhibit 99 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. |
Description |
|
99 |
Earnings Release and Statistical Pages |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
HUMANA INC. |
||||
|
||||
|
|
BY: |
/s/ Steven E. McCulley |
|
Steven E. McCulley |
||||
Vice President and Controller |
||||
(Principal Accounting Officer) |
||||
Dated: |
February 4, 2013 |
INDEX TO EXHIBITS
Exhibit No. |
Description |
|
99 |
Earnings Release and Statistical Pages |
Exhibit 99
Humana Reports Fourth Quarter and Full Year 2012 Financial Results; Reaffirms 2013 Financial Guidance
LOUISVILLE, Ky.--(BUSINESS WIRE)--February 4, 2013--Humana Inc. (NYSE: HUM) today reported diluted earnings per common share (EPS) for the quarter ended December 31, 2012 (4Q12) of $1.19, compared to $1.20 per share for the quarter ended December 31, 2011 (4Q11). Results for 4Q12 were relatively unchanged versus those for 4Q11, but exceeded management’s previous expectations.
For the year ended December 31, 2012 (FY12) the company reported $7.47 in EPS compared to $8.46 for the year ended December 31, 2011 (FY11), which was higher than management’s previous expectations for FY12 EPS in the range of $7.25 to $7.35. FY12 consolidated results included $0.48 per share of benefit from favorable prior period medical claims reserve development compared to $0.77 per share in FY11.
The company continues to anticipate EPS for the year ending December 31, 2013 (FY13) in the range of $7.60 to $7.80 as improving operating results and modest accretion from the Metropolitan Health Networks, Inc. (Metropolitan) acquisition that closed in late FY12 are expected to be generally offset by slightly higher flu-related medical costs than previously anticipated, as well as additional interest expense associated with the company’s recent senior notes offering.
“The progress we made building our clinical capabilities in 2012 positions us strongly for success in 2014 and beyond,” said Bruce D. Broussard, President and Chief Executive Officer of Humana. “For 2013, we will continue to enhance our integrated care delivery model, which we believe represents the future of health care delivery, as we forecast another year of growth in revenues, earnings and Medicare membership.”
Consolidated Highlights
Revenues – 4Q12 consolidated revenues were $9.56 billion, an increase of 6 percent from $9.06 billion in 4Q11, with total premiums and services revenue up 5 percent compared to the prior year’s quarter. The year-over-year increase in premiums and services revenue was primarily driven by higher Retail and Employer Group segment revenues resulting from higher average individual and group Medicare membership, partially offset by the company’s new South Region TRICARE contract being accounted for as self-funded versus fully-insured for the previous contract. The new contract became effective on April 1, 2012.
FY12 consolidated revenues increased 6 percent to $39.13 billion from $36.83 billion in FY11 with total premiums and services revenue also up 6 percent compared to the prior year period, as a result of similar segment-level changes as those affecting the fourth quarter year-over-year change.
Benefits expense – The 4Q12 consolidated benefit ratio (benefits expense as a percent of premiums) of 83.7 percent increased by 190 basis points from 81.8 percent for the prior year’s quarter due primarily to a 360 basis point increase in the Retail Segment benefit ratio, as discussed more fully below.
The consolidated benefit ratio for FY12 of 83.7 percent increased by 160 basis points from the FY11 consolidated benefit ratio of 82.1 percent also primarily due to a 290 basis point increase in the benefit ratio for the Retail Segment.
Operating expenses – The consolidated operating cost ratio (operating costs as a percent of total revenues less investment income) of 17.5 percent for 4Q12 declined from 17.7 percent in 4Q11 primarily due to substantial reductions in this operating metric for the Retail and Employer Group Segments nearly offset by the impact of the accounting for the company’s new South Region TRICARE contract in the company’s Other Businesses.
The FY12 consolidated operating cost ratio of 15.1 percent increased 30 basis points from 14.8 percent for FY11 primarily due to the impact of the new South Region TRICARE contract discussed above, partially offset by lower year-over-year operating cost ratios for the Retail and Employer Group Segments.
Strategic transaction update – On December 21, 2012, Humana completed its previously disclosed acquisition of Metropolitan, a Medical Services Organization that coordinates medical care for Medicare Advantage and Medicaid beneficiaries, primarily in Florida.
Retail Segment Highlights
Pretax results:
Enrollment:
Premiums and services revenue:
Benefits expense:
Operating costs:
Employer Group Segment Highlights
Pretax results:
Enrollment:
Premiums and services revenue:
Benefits expense:
Operating costs:
Health and Well-Being Services Segment Highlights
Pretax results:
Revenues:
Operating costs:
Other Businesses Highlights
Pretax results:
Balance Sheet
Cash Flows from Operations
Cash flows provided by operations for 4Q12 were $205 million compared to cash flows used in operations of $1.80 billion in 4Q11. The company also evaluates operating cash flows on a non-GAAP basis:
Net cash from operating activities
(in millions) |
4Q12
Cash Flows |
4Q11
Cash Flows |
||||
GAAP | $ | 205 | ($1,797 | ) | ||
Timing of premium payment from CMS (b) | - | 1,796 | ||||
Non-GAAP (c) |
$ | 205 | ($1 | ) | ||
The year-over-year increase in the non-GAAP cash flows from operations is due primarily to the effect on cash flows of changes in working capital accounts.
FY12 cash flows from operations of $1.92 billion compared to $2.08 billion for FY11, primarily due to lower net income year over year.
Share Repurchase Program
Footnotes
(a) The company provides a full range of insured specialty products including dental, vision and other supplemental health and financial protection products. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products. Other supplemental benefits include life, disability, and fixed benefit products including cancer and critical illness policies.
(b) Generally, when the first day of a month falls on a weekend or holiday, with the exception of January 1 (New Year’s Day), the company receives this payment on the last business day of the previous month. Consequently, 4Q11 cash flows included two monthly Medicare payments compared to three monthly Medicare payments during 4Q12.
(c) The Company has included certain financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP) in its summary of financial results within this earnings press release. The company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful to both management and its investors in analyzing the company's ongoing business and operating performance. Internally, management uses these non-GAAP financial measures as indicators of business performance, as well as for operational planning and decision making purposes. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Conference Call & Virtual Slide Presentation
Humana will host a conference call, as well as a virtual slide presentation, at 9:00 a.m. eastern time today to discuss its financial results for the quarter and the company’s expectations for future earnings. A live virtual presentation (audio with slides) may be accessed via Humana’s Investor Relations page at www.humana.com. The company suggests web participants sign on at least 15 minutes in advance of the call. The company also suggests web participants visit the site well in advance of the call to run a system test and to download any free software needed to view the presentation.
All parties interested in the audio-only portion of the conference call are invited to dial 888-625-7430. No password is required. The company suggests participants dial in at least ten minutes in advance of the call. For those unable to participate in the live event, the virtual presentation archive may be accessed via the Historical Webcasts & Presentations section of the Investor Relations page at www.humana.com.
Cautionary Statement
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in investor presentations, press releases, Securities and Exchange Commission (SEC) filings, and in oral statements made by or with the approval of one of Humana’s executive officers, the words or phrases like “expects,” “anticipates,” “intends,” “likely will result,” “estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions, including, among other things, information set forth in the “Risk Factors” section of the company’s SEC filings, a summary of which includes but is not limited to the following:
In making forward-looking statements, Humana is not undertaking to address or update them in future filings or communications regarding its business or results. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed herein may or may not occur. There also may be other risks that the company is unable to predict at this time. Any of these risks and uncertainties may cause actual results to differ materially from the results discussed in the forward-looking statements.
Humana advises investors to read the following documents as filed by the company with the SEC for further discussion both of the risks it faces and its historical performance:
About Humana
Humana Inc., headquartered in Louisville, Kentucky, is a leading health care company that offers a wide range of insurance products and health and wellness services that incorporate an integrated approach to lifelong well-being. By leveraging the strengths of its core businesses, Humana believes it can better explore opportunities for existing and emerging adjacencies in health care that can further enhance wellness opportunities for the millions of people across the nation with whom the company has relationships.
More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at www.humana.com, including copies of:
Humana Inc. – Earnings Guidance Points as of February 4, 2013 |
(in accordance with Generally Accepted |
For the year ending December 31, 2013 | Comments | ||||
Accounting Principles) | ||||||
Diluted earnings per common share (EPS) | ||||||
Full Year | $7.60 to $7.80 | FY13 includes approximately $0.30 per share in | ||||
investment spending | ||||||
First Quarter | $1.75 to $1.85 | |||||
Revenues | ||||||
Consolidated |
$41.0 billion to $41.5 billion | Includes expected investment income in the range | ||||
of $365 million to $385 million for 2013 | ||||||
Retail Segment | $26.25 billion to $26.75 billion | Segment-level revenues include intersegment | ||||
Employer Group Segment | $11.0 billion to $11.5 billion | amounts that eliminate in consolidation | ||||
Health and Well-Being Services |
||||||
Segment | $15.0 billion to $15.5 billion | |||||
Other Businesses | $1.8 billion to $2.1 billion | |||||
Ending medical membership versus prior | ||||||
year end | ||||||
Retail Segment | Up 100,000 to 120,000 | Includes the January 1, 2013 disposition of | ||||
Medicare Advantage | 12,600 Medicare Advantage members acquired in | |||||
the March 2012 Arcadian transaction in | ||||||
accordance with the company’s previously | ||||||
disclosed agreement with the United States | ||||||
Department of Justice. | ||||||
Medicare stand-alone PDPs | Up 135,000 to 175,000 | |||||
HumanaOne | Down approximately 50,000 | |||||
Medicare Supplement | Up 15,000 to 25,000 | |||||
Employer Group Segment | ||||||
Medicare Advantage | Up approximately 20,000 | |||||
Commercial Fully-Insured |
Flat to up 5,000 | |||||
Commercial ASO | Down 25,000 to 45,000 | |||||
Benefit ratios | Benefits expense as a percent of premiums | |||||
Retail Segment | 84.5% to 85.0% | |||||
Employer Group Segment | 85.0% to 86.0% | |||||
Operating cost ratios | Operating costs as a percent of total revenues | |||||
excluding investment income | ||||||
Consolidated | 15.0% to 15.5% | |||||
Health and Well-Being Services |
|
|||||
Segment |
95.5% to 96.0% |
|||||
Consolidated depreciation and amortization | Certain D&A is included in benefits expense on | |||||
Income statement | $330 million to $350 million | the income statement but shown as a non-cash | ||||
Cash flows statement | $415 million to $435 million | item on the cash flows statement | ||||
Consolidated interest expense | $140 million to $145 million | |||||
Detailed pretax results | Segment-level pretax results and margins include | |||||
the impact of net investment income | ||||||
Retail Segment | $1.29 billion to $1.33 billion; | |||||
approximately 5% pretax margin | ||||||
Employer Group Segment | $105 million to $155 million; | |||||
1.0% to 1.2% pretax margin | ||||||
Health and Well-Being Services | ||||||
Segment |
$500 million to $550 million; | |||||
3.0% to 3.5% pretax margin | ||||||
Effective Tax Rate | Approximately 37% | |||||
Diluted shares | Approximately 161.5 million | Projections exclude the impact of future share | ||||
repurchases | ||||||
Cash flows from operations | $1.8 billion to $2.0 billion | |||||
Capital expenditures | $425 million to $450 million |
Humana Inc. |
Statistical Schedules |
And |
Supplementary Information |
4Q12 Earnings Release |
S-1 |
Humana Inc. |
||||
Statistical Schedules and Supplementary Information |
||||
4Q12 Earnings Release |
||||
Contents |
||||
Page |
Description |
|||
S-3-4 | Consolidated Statements of Income | |||
S-5-6 | Quarterly Segment Financial Information | |||
S-7-8 | FY Segment Financial Information | |||
S-9 | Consolidated Balance Sheets | |||
S-10-11 | Consolidated Statements of Cash Flows | |||
S-12 | Key Income Statement Ratios and Segment Operating Results | |||
S-13-14 | Health and Well-Being Services Segment Metrics | |||
S-15 | Membership Detail | |||
S-16-17 | Premiums and Services Revenue Detail | |||
S-18 | Medicare Summary | |||
S-19 | Investments | |||
S-20-22 | Benefits Payable Detail and Statistics | |||
S-23 | Footnotes | |||
S-2 |
Humana Inc. | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
In millions, except per common share results | |||||||||||||||
Three Months Ended December 31, | |||||||||||||||
Dollar | Percentage | ||||||||||||||
2012 | 2011 | Change | Change | ||||||||||||
Revenues: | |||||||||||||||
Premiums | $ | 8,980 | $ | 8,638 | $ | 342 | 4.0 | % | |||||||
Services | 475 | 325 | 150 | 46.2 | % | ||||||||||
Investment income | 102 | 93 | 9 | 9.7 | % | ||||||||||
Total revenues | 9,557 | 9,056 | 501 | 5.5 | % | ||||||||||
Operating expenses: | |||||||||||||||
Benefits | 7,516 | 7,062 | 454 | 6.4 | % | ||||||||||
Operating costs | 1,655 | 1,585 | 70 | 4.4 | % | ||||||||||
Depreciation and amortization | 77 | 69 | 8 | 11.6 | % | ||||||||||
Total operating expenses | 9,248 | 8,716 | 532 | 6.1 | % | ||||||||||
Income from operations | 309 | 340 | (31 | ) | -9.1 | % | |||||||||
Interest expense | 27 | 27 | 0 | 0.0 | % | ||||||||||
Income before income taxes | 282 | 313 | (31 | ) | -9.9 | % | |||||||||
Provision for income taxes | 90 | 114 | (24 | ) | -21.1 | % | |||||||||
Net income | $ | 192 | $ | 199 | $ | (7 | ) | -3.5 | % | ||||||
Basic earnings per common share | $ | 1.21 | $ | 1.22 | $ | (0.01 | ) | -0.8 | % | ||||||
Diluted earnings per common share | $ | 1.19 | $ | 1.20 | $ | (0.01 | ) | -0.8 | % | ||||||
Shares used in computing basic earnings per common share (000's) | 158,764 | 163,238 | |||||||||||||
Shares used in computing diluted earnings per common share (000's) | 160,682 | 165,632 | |||||||||||||
S-3 |
Humana Inc. | ||||||||||
Consolidated Statements of Income | ||||||||||
In millions, except per common share results | ||||||||||
Twelve Months Ended December 31, | ||||||||||
Dollar | Percentage | |||||||||
2012 | 2011 | Change | Change | |||||||
Revenues: | ||||||||||
Premiums | $ 37,009 | $ 35,106 | $ 1,903 | 5.4% | ||||||
Services | 1,726 | 1,360 | 366 | 26.9% | ||||||
Investment income | 391 | 366 | 25 | 6.8% | ||||||
Total revenues | 39,126 | 36,832 | 2,294 | 6.2% | ||||||
Operating expenses: | ||||||||||
Benefits | 30,985 | 28,823 | 2,162 | 7.5% | ||||||
Operating costs | 5,830 | 5,395 | 435 | 8.1% | ||||||
Depreciation and amortization | 295 | 270 | 25 | 9.3% | ||||||
Total operating expenses | 37,110 | 34,488 | 2,622 | 7.6% | ||||||
Income from operations | 2,016 | 2,344 | (328) | -14.0% | ||||||
Interest expense | 105 | 109 | (4) | -3.7% | ||||||
Income before income taxes | 1,911 | 2,235 | (324) | -14.5% | ||||||
Provision for income taxes | 689 | 816 | (127) | -15.6% | ||||||
Net income | $ 1,222 | $ 1,419 | $ (197) | -13.9% | ||||||
Basic earnings per common share | $ 7.56 | $ 8.58 | $ (1.02) | -11.9% | ||||||
Diluted earnings per common share | $ 7.47 | $ 8.46 | $ (0.99) | -11.7% | ||||||
Shares used in computing basic earnings per common share (000's) | 161,484 | 165,413 | ||||||||
Shares used in computing diluted earnings per common share (000's) | 163,457 | 167,827 | ||||||||
S-4 |
Humana Inc. | ||||||||||||||||||||||||||||||
4Q12 Segment Financial Information | ||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 5,184 | $ | 1,005 | $ | - | $ | - | $ | - | $ | 6,189 | ||||||||||||||||||
Medicare stand-alone PDP | 620 | 2 | - | 63 | - | 685 | ||||||||||||||||||||||||
Total Medicare | 5,804 | 1,007 | - | 63 | - | 6,874 | ||||||||||||||||||||||||
Fully-insured | 255 | 1,251 | - | - | - | 1,506 | ||||||||||||||||||||||||
Specialty | 46 | 277 | - | - | - | 323 | ||||||||||||||||||||||||
Military services | - | - | - | 11 | - | 11 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 266 | - | 266 | ||||||||||||||||||||||||
Total premiums | 6,105 | 2,535 | - | 340 | - | 8,980 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 271 | - | - | 271 | ||||||||||||||||||||||||
ASO and other (B) | 7 | 92 | - | 100 | - | 199 | ||||||||||||||||||||||||
Pharmacy | - | - | 5 | - | - | 5 | ||||||||||||||||||||||||
Total services revenue | 7 | 92 | 276 | 100 | - | 475 | ||||||||||||||||||||||||
Total revenues - external customers | 6,112 | 2,627 | 276 | 440 | - | 9,455 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | - | 4 | 2,423 | - | (2,427 | ) | - | |||||||||||||||||||||||
Products | - | - | 565 | - | (565 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | - | 4 | 2,988 | - | (2,992 | ) | - | |||||||||||||||||||||||
Investment income | 21 | 11 | - | 15 | 55 | 102 | ||||||||||||||||||||||||
Total revenues | 6,133 | 2,642 | 3,264 | 455 | (2,937 | ) | 9,557 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 5,042 | 2,208 | - | 354 | (88 | ) | 7,516 | |||||||||||||||||||||||
Operating costs | 800 | 439 | 3,161 | 128 | (2,873 | ) | 1,655 | |||||||||||||||||||||||
Depreciation and amortization | 35 | 20 | 28 | 4 | (10 | ) | 77 | |||||||||||||||||||||||
Total operating expenses | 5,877 | 2,667 | 3,189 | 486 | (2,971 | ) | 9,248 | |||||||||||||||||||||||
Income (loss) from operations | 256 | (25 | ) | 75 | (31 | ) | 34 | 309 | ||||||||||||||||||||||
Interest expense | - | - | - | - | 27 | 27 | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 256 | $ | (25 | ) | $ | 75 | $ | (31 | ) | $ | 7 | $ | 282 | ||||||||||||||||
Benefit ratio | 82.6 | % | 87.1 | % | 104.1 | % | 83.7 | % | ||||||||||||||||||||||
Operating cost ratio (C) | 13.1 | % | 16.7 | % | 96.8 | % | 29.1 | % | 17.5 | % | ||||||||||||||||||||
S-5 |
Humana Inc. | ||||||||||||||||||||||||||||||
4Q11 Segment Financial Information | ||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 4,454 | $ | 789 | $ | - | $ | - | $ | - | $ | 5,243 | ||||||||||||||||||
Medicare stand-alone PDP | 580 | 2 | - | 57 | - | 639 | ||||||||||||||||||||||||
Total Medicare | 5,034 | 791 | - | 57 | - | 5,882 | ||||||||||||||||||||||||
Fully-insured | 233 | 1,181 | - | - | - | 1,414 | ||||||||||||||||||||||||
Specialty | 35 | 237 | - | - | - | 272 | ||||||||||||||||||||||||
Military services | - | - | - | 814 | - | 814 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 256 | - | 256 | ||||||||||||||||||||||||
Total premiums | 5,302 | 2,209 | - | 1,127 | - | 8,638 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 222 | - | - | 222 | ||||||||||||||||||||||||
ASO and other (B) | 4 | 87 | - | 9 | - | 100 | ||||||||||||||||||||||||
Pharmacy | - | - | 3 | - | - | 3 | ||||||||||||||||||||||||
Total services revenue | 4 | 87 | 225 | 9 | - | 325 | ||||||||||||||||||||||||
Total revenues - external customers | 5,306 | 2,296 | 225 | 1,136 | - | 8,963 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | - | 4 | 2,185 | - | (2,189 | ) | - | |||||||||||||||||||||||
Products | - | - | 490 | - | (490 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | - | 4 | 2,675 | - | (2,679 | ) | - | |||||||||||||||||||||||
Investment income | 19 | 12 | - | 14 | 48 | 93 | ||||||||||||||||||||||||
Total revenues | 5,325 | 2,312 | 2,900 | 1,150 | (2,631 | ) | 9,056 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 4,190 | 1,909 | - | 1,036 | (73 | ) | 7,062 | |||||||||||||||||||||||
Operating costs | 779 | 433 | 2,794 | 110 | (2,531 | ) | 1,585 | |||||||||||||||||||||||
Depreciation and amortization | 30 | 21 | 21 | 3 | (6 | ) | 69 | |||||||||||||||||||||||
Total operating expenses | 4,999 | 2,363 | 2,815 | 1,149 | (2,610 | ) | 8,716 | |||||||||||||||||||||||
Income (loss) from operations | 326 | (51 | ) | 85 | 1 | (21 | ) | 340 | ||||||||||||||||||||||
Interest expense | - | - | - | - | 27 | 27 | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 326 | $ | (51 | ) | $ | 85 | $ | 1 | $ | (48 | ) | $ | 313 | ||||||||||||||||
Benefit ratio | 79.0 | % | 86.4 | % | 91.9 | % | 81.8 | % | ||||||||||||||||||||||
Operating cost ratio (C) | 14.7 | % | 18.8 | % | 96.3 | % | 9.7 | % | 17.7 | % | ||||||||||||||||||||
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S-6 |
Humana Inc. | ||||||||||||||||||||||||||||||
FY 12 Segment Financial Information | ||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 20,788 | $ | 4,064 | $ | - | $ | - | $ | - | $ | 24,852 | ||||||||||||||||||
Medicare stand-alone PDP | 2,587 | 8 | - | 266 | - | 2,861 | ||||||||||||||||||||||||
Total Medicare | 23,375 | 4,072 | - | 266 | - | 27,713 | ||||||||||||||||||||||||
Fully-insured | 1,004 | 4,996 | - | - | - | 6,000 | ||||||||||||||||||||||||
Specialty | 171 | 1,070 | - | - | - | 1,241 | ||||||||||||||||||||||||
Military services | - | - | - | 1,017 | - | 1,017 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 1,038 | - | 1,038 | ||||||||||||||||||||||||
Total premiums | 24,550 | 10,138 | - | 2,321 | - | 37,009 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 1,020 | - | - | 1,020 | ||||||||||||||||||||||||
ASO and other (B) | 24 | 358 | - | 308 | - | 690 | ||||||||||||||||||||||||
Pharmacy | - | - | 16 | - | - | 16 | ||||||||||||||||||||||||
Total services revenue | 24 | 358 | 1,036 | 308 | - | 1,726 | ||||||||||||||||||||||||
Total revenues - external customers | 24,574 | 10,496 | 1,036 | 2,629 | - | 38,735 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | 2 | 15 | 9,610 | - | (9,627 | ) | - | |||||||||||||||||||||||
Products | - | - | 2,342 | - | (2,342 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | 2 | 15 | 11,952 | - | (11,969 | ) | - | |||||||||||||||||||||||
Investment income | 79 | 42 | - | 58 | 212 | 391 | ||||||||||||||||||||||||
Total revenues | 24,655 | 10,553 | 12,988 | 2,687 | (11,757 | ) | 39,126 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 20,651 | 8,524 | - | 2,198 | (388 | ) | 30,985 | |||||||||||||||||||||||
Operating costs | 2,711 | 1,696 | 12,407 | 492 | (11,476 | ) | 5,830 | |||||||||||||||||||||||
Depreciation and amortization | 131 | 80 | 95 | 16 | (27 | ) | 295 | |||||||||||||||||||||||
Total operating expenses | 23,493 | 10,300 | 12,502 | 2,706 | (11,891 | ) | 37,110 | |||||||||||||||||||||||
Income (loss) from operations | 1,162 | 253 | 486 | (19 | ) | 134 | 2,016 | |||||||||||||||||||||||
Interest expense | - | - | - | - | 105 | 105 | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 1,162 | $ | 253 | $ | 486 | $ | (19 | ) | $ | 29 | $ | 1,911 | |||||||||||||||||
Benefit ratio | 84.1 | % | 84.1 | % | 94.7 | % | 83.7 | % | ||||||||||||||||||||||
Operating cost ratio (C) | 11.0 | % | 16.1 | % | 95.5 | % | 18.7 | % | 15.1 | % | ||||||||||||||||||||
S-7 |
Humana Inc. | ||||||||||||||||||||||||||||||
FY 11 Segment Financial Information | ||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 18,100 | $ | 3,152 | $ | - | $ | - | $ | - | $ | 21,252 | ||||||||||||||||||
Medicare stand-alone PDP | 2,317 | 8 | - | 253 | - | 2,578 | ||||||||||||||||||||||||
Total Medicare | 20,417 | 3,160 | - | 253 | - | 23,830 | ||||||||||||||||||||||||
Fully-insured | 861 | 4,782 | - | - | - | 5,643 | ||||||||||||||||||||||||
Specialty | 124 | 935 | - | - | - | 1,059 | ||||||||||||||||||||||||
Military services | - | - | - | 3,616 | - | 3,616 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 958 | - | 958 | ||||||||||||||||||||||||
Total premiums | 21,402 | 8,877 | - | 4,827 | - | 35,106 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 892 | - | - | 892 | ||||||||||||||||||||||||
ASO and other (B) | 16 | 356 | - | 85 | - | 457 | ||||||||||||||||||||||||
Pharmacy | - | - | 11 | - | - | 11 | ||||||||||||||||||||||||
Total services revenue | 16 | 356 | 903 | 85 | - | 1,360 | ||||||||||||||||||||||||
Total revenues - external customers | 21,418 | 9,233 | 903 | 4,912 | - | 36,466 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | - | 14 | 8,510 | - | (8,524 | ) | - | |||||||||||||||||||||||
Products | - | - | 1,820 | - | (1,820 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | - | 14 | 10,330 | - | (10,344 | ) | - | |||||||||||||||||||||||
Investment income | 76 | 48 | - | 54 | 188 | 366 | ||||||||||||||||||||||||
Total revenues | 21,494 | 9,295 | 11,233 | 4,966 | (10,156 | ) | 36,832 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 17,383 | 7,318 | - | 4,411 | (289 | ) | 28,823 | |||||||||||||||||||||||
Operating costs | 2,405 | 1,650 | 10,798 | 461 | (9,919 | ) | 5,395 | |||||||||||||||||||||||
Depreciation and amortization | 119 | 85 | 82 | 10 | (26 | ) | 270 | |||||||||||||||||||||||
Total operating expenses | 19,907 | 9,053 | 10,880 | 4,882 | (10,234 | ) | 34,488 | |||||||||||||||||||||||
Income from operations | 1,587 | 242 | 353 | 84 | 78 | 2,344 | ||||||||||||||||||||||||
Interest expense | - | - | - | - | 109 | 109 | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 1,587 | $ | 242 | $ | 353 | $ | 84 | $ | (31 | ) | $ | 2,235 | |||||||||||||||||
Benefit ratio | 81.2 | % | 82.4 | % | 91.4 | % | 82.1 | % | ||||||||||||||||||||||
Operating cost ratio (C) | 11.2 | % | 17.8 | % | 96.1 | % | 9.4 | % | 14.8 | % | ||||||||||||||||||||
S-8 |
Humana Inc. | |||||||||||||||
Consolidated Balance Sheets | |||||||||||||||
Dollars in millions, except share amounts | |||||||||||||||
December 31, | December 31, | YOY Change | |||||||||||||
2012 | 2011 | Dollar | Percent | ||||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 1,306 | $ | 1,377 | |||||||||||
Investment securities | 8,001 | 7,743 | |||||||||||||
Receivables, net | 733 | 1,034 | |||||||||||||
Other | 1,670 | 1,027 | |||||||||||||
Total current assets | 11,710 | 11,181 | $ | 529 | 4.7 | % | |||||||||
Property and equipment, net | 1,098 | 912 | |||||||||||||
Long-term investment securities | 1,846 | 1,710 | |||||||||||||
Goodwill | 3,640 | 2,740 | |||||||||||||
Other | 1,685 | 1,165 | |||||||||||||
Total assets | 19,979 | 17,708 | $ | 2,271 | 12.8 | % | |||||||||
Liabilities and Stockholders' Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Benefits payable | 3,779 | 3,754 | |||||||||||||
Trade accounts payable and accrued expenses | 2,042 | 1,783 | |||||||||||||
Book overdraft | 324 | 306 | |||||||||||||
Unearned revenues | 230 | 213 | |||||||||||||
Total current liabilities | 6,375 | 6,056 | $ | 319 | 5.3 | % | |||||||||
Long-term debt | 2,611 | 1,659 | |||||||||||||
Future policy benefits payable | 1,858 | 1,663 | |||||||||||||
Other long-term liabilities | 288 | 267 | |||||||||||||
Total liabilities | 11,132 | 9,645 | $ | 1,487 | 15.4 | % | |||||||||
Commitments and contingencies | |||||||||||||||
Stockholders' equity: | |||||||||||||||
Preferred stock, $1 par; 10,000,000 shares authorized, none issued | - | - | |||||||||||||
Common stock, $0.16 2/3 par; 300,000,000 shares authorized; 194,470,820 issued at December 31, 2012 |
32 | 32 | |||||||||||||
Capital in excess of par value | 2,101 | 1,938 | |||||||||||||
Retained earnings | 7,881 | 6,825 | |||||||||||||
Accumulated other comprehensive income | 386 | 303 | |||||||||||||
Treasury stock, at cost, 36,138,955 shares at December 31, 2012 | (1,553 | ) | (1,035 | ) | |||||||||||
Total stockholders' equity | 8,847 | 8,063 | $ | 784 | 9.7 | % | |||||||||
Total liabilities and stockholders' equity | $ | 19,979 | $ | 17,708 | $ | 2,271 | 12.8 | % | |||||||
Debt-to-total capitalization ratio | 22.8 | % | 17.1 | % | |||||||||||
S-9 |
Humana Inc. | ||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||
Dollars in millions | ||||||||||||||||
Three Months Ended December 31, | ||||||||||||||||
Dollar | Percentage | |||||||||||||||
2012 | 2011 | Change | Change | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 192 | $ | 199 | ||||||||||||
Adjustments to reconcile net income to net cash
provided by (used in) operating activities: |
||||||||||||||||
Depreciation and amortization | 100 | 78 | ||||||||||||||
Net realized capital gains | (13 | ) | (4 | ) | ||||||||||||
Stock-based compensation | 14 | 14 | ||||||||||||||
(Benefit from) provision for deferred income taxes | (74 | ) | 10 | |||||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: |
||||||||||||||||
Receivables | (84 | ) | 2 | |||||||||||||
Other assets | (17 | ) | 22 | |||||||||||||
Benefits payable | (172 | ) | (143 | ) | ||||||||||||
Other liabilities | 179 | (198 | ) | |||||||||||||
Unearned revenues | 52 | (1,794 | ) | |||||||||||||
Other | 28 | 17 | ||||||||||||||
Net cash provided by (used in) operating activities | 205 | (1,797 | ) | $ | 2,002 | 111.4 | % | |||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisitions, net of cash acquired | (947 | ) | (212 | ) | ||||||||||||
Purchases of property and equipment | (106 | ) | (120 | ) | ||||||||||||
Purchases of investment securities | (1,055 | ) | (1,011 | ) | ||||||||||||
Proceeds from maturities of investment securities | 386 | 494 | ||||||||||||||
Proceeds from sales of investment securities | 510 | 634 | ||||||||||||||
Net cash used in investing activities | (1,212 | ) | (215 | ) | ($997 | ) | -463.7 | % | ||||||||
Cash flows from financing activities | ||||||||||||||||
Receipts (withdrawals) from contract deposits, net | (50 | ) | (603 | ) | ||||||||||||
Proceeds from issuance of senior notes, net | 990 | - | ||||||||||||||
Change in book overdraft | 47 | 7 | ||||||||||||||
Common stock repurchases | (5 | ) | - | |||||||||||||
Excess tax benefit from stock-based compensation | 1 | 3 | ||||||||||||||
Dividends paid | (41 | ) | (41 | ) | ||||||||||||
Proceeds from stock option exercises and other | 8 | 4 | ||||||||||||||
Net cash provided by (used in) financing activities | 950 | (630 | ) | $ | 1,580 | 250.8 | % | |||||||||
Decrease in cash and cash equivalents | (57 | ) | (2,642 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 1,363 | 4,019 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 1,306 | $ | 1,377 | ||||||||||||
S-10 |
Humana Inc. | ||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||
Dollars in millions | ||||||||||||||||
Twelve Months Ended December 31, | ||||||||||||||||
Dollar | Percentage | |||||||||||||||
2012 | 2011 | Change | Change | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 1,222 | $ | 1,419 | ||||||||||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||||||||||
Depreciation and amortization | 338 | 303 | ||||||||||||||
Net realized capital gains | (33 | ) | (11 | ) | ||||||||||||
Stock-based compensation | 82 | 67 | ||||||||||||||
(Benefit from) provision for deferred income taxes | (80 | ) | 22 | |||||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: |
||||||||||||||||
Receivables | 352 | (75 | ) | |||||||||||||
Other assets | (253 | ) | (183 | ) | ||||||||||||
Benefits payable | (41 | ) | 256 | |||||||||||||
Other liabilities | 300 | 194 | ||||||||||||||
Unearned revenues | (43 | ) | 26 | |||||||||||||
Other | 79 | 61 | ||||||||||||||
Net cash provided by operating activities | 1,923 | 2,079 | ($156 | ) | -7.5 | % | ||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisitions, net of cash acquired | (1,235 | ) | (226 | ) | ||||||||||||
Purchases of property and equipment | (410 | ) | (336 | ) | ||||||||||||
Purchases of investment securities | (3,221 | ) | (3,678 | ) | ||||||||||||
Proceeds from maturities of investment securities | 1,497 | 1,623 | ||||||||||||||
Proceeds from sales of investment securities | 1,404 | 1,259 | ||||||||||||||
Net cash used in investing activities | (1,965 | ) | (1,358 | ) | ($607 | ) | -44.7 | % | ||||||||
Cash flows from financing activities | ||||||||||||||||
Receipts (withdrawals) from contract deposits, net | (397 | ) | (378 | ) | ||||||||||||
Repayment of long-term debt | (36 | ) | - | |||||||||||||
Proceeds from issuance of senior notes, net | 990 | - | ||||||||||||||
Change in book overdraft | 18 | (103 | ) | |||||||||||||
Common stock repurchases | (518 | ) | (541 | ) | ||||||||||||
Excess tax benefit from stock-based compensation | 22 | 15 | ||||||||||||||
Dividends paid | (165 | ) | (82 | ) | ||||||||||||
Proceeds from stock option exercises and other | 57 | 72 | ||||||||||||||
Net cash provided by (used) in financing activities | (29 | ) | (1,017 | ) | $ | 988 | 97.1 | % | ||||||||
Decrease in cash and cash equivalents | (71 | ) | (296 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 1,377 | 1,673 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 1,306 | $ | 1,377 | ||||||||||||
S-11 |
Humana Inc. | |||||||||||||||||||||||||||||||||
Key Income Statement Ratios and Segment Operating Results | |||||||||||||||||||||||||||||||||
Dollars in millions | |||||||||||||||||||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||
Percentage | Percentage | ||||||||||||||||||||||||||||||||
2012 | 2011 | Difference | Change | 2012 | 2011 | Difference | Change | ||||||||||||||||||||||||||
Benefit ratio | |||||||||||||||||||||||||||||||||
Retail | 82.6 | % | 79.0 | % | 3.6 | % | 84.1 | % | 81.2 | % | 2.9 | % | |||||||||||||||||||||
Employer Group | 87.1 | % | 86.4 | % | 0.7 | % | 84.1 | % | 82.4 | % | 1.7 | % | |||||||||||||||||||||
Other Businesses | 104.1 | % | 91.9 | % | 12.2 | % | 94.7 | % | 91.4 | % | 3.3 | % | |||||||||||||||||||||
Consolidated | 83.7 | % | 81.8 | % | 1.9 | % | 83.7 | % | 82.1 | % | 1.6 | % | |||||||||||||||||||||
Operating cost ratio (C) | |||||||||||||||||||||||||||||||||
Retail | 13.1 | % | 14.7 | % | -1.6 | % | 11.0 | % | 11.2 | % | -0.2 | % | |||||||||||||||||||||
Employer Group | 16.7 | % | 18.8 | % | -2.1 | % | 16.1 | % | 17.8 | % | -1.7 | % | |||||||||||||||||||||
Health and Well-Being Services | 96.8 | % | 96.3 | % | 0.5 | % | 95.5 | % | 96.1 | % | -0.6 | % | |||||||||||||||||||||
Other Businesses | 29.1 | % | 9.7 | % | 19.4 | % | 18.7 | % | 9.4 | % | 9.3 | % | |||||||||||||||||||||
Consolidated | 17.5 | % | 17.7 | % | -0.2 | % | 15.1 | % | 14.8 | % | 0.3 | % | |||||||||||||||||||||
Detail of pretax income (loss) | |||||||||||||||||||||||||||||||||
Retail | $ | 256 | $ | 326 | ($70 | ) | -21.5 | % | $ | 1,162 | $ | 1,587 | ($425 | ) | -26.8 | % | |||||||||||||||||
Employer Group | ($25 | ) | ($51 | ) | $ | 26 | 51.0 | % | $ | 253 | $ | 242 | $ | 11 | 4.5 | % | |||||||||||||||||
Health and Well-Being Services | $ | 75 | $ | 85 | ($10 | ) | -11.8 | % | $ | 486 | $ | 353 | $ | 133 | 37.7 | % | |||||||||||||||||
Other Businesses | ($31 | ) | $ | 1 | ($32 | ) | -3200.0 | % | ($19 | ) | $ | 84 | ($103 | ) | -122.6 | % | |||||||||||||||||
Consolidated | $ | 282 | $ | 313 | ($31 | ) | -9.9 | % | $ | 1,911 | $ | 2,235 | ($324 | ) | -14.5 | % | |||||||||||||||||
S-12 |
Humana Inc. | ||||||||||||||
Health and Well-Being Services Segment Metrics | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2012 | 2011 | Difference | ||||||||||||
Primary Care Providers: | ||||||||||||||
Risk | ||||||||||||||
Owned / JV | 2,500 | 900 | 1,600 | 177.8 | % | |||||||||
Contracted | 2,900 | 2,900 | - | 0.0 | % | |||||||||
Path-to-Risk | 18,200 | 12,000 | 6,200 | 51.7 | % | |||||||||
Other | 84,900 | 76,400 | 8,500 | 11.1 | % | |||||||||
Total | 108,500 | 92,200 | 16,300 | 17.7 | % | |||||||||
Care Management Clinicians: | ||||||||||||||
Employed | 3,300 | 2,300 | 1,000 | 43.5 | % | |||||||||
Contracted | 3,400 | 1,500 | 1,900 | 126.7 | % | |||||||||
Total | 6,700 | 3,800 | 2,900 | 76.3 | % | |||||||||
Care Management Statistics: | ||||||||||||||
Percentage of members with complex chronic conditions in Humana Chronic Care Program |
52.0 | % | 46.0 | % | 6.0 | % | ||||||||
Percentage of high-risk discharges reviewed by Humana Transitions Program |
21.6 | % | N/A | N/A | ||||||||||
S-13 |
Humana Inc. | ||||||||||||||||||||||||||
Health and Well-Being Services Segment Metrics (Continued) | ||||||||||||||||||||||||||
Script volume in thousands | ||||||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
2012 | 2011 | Difference | 2012 | 2011 | Difference | |||||||||||||||||||||
Pharmacy: | ||||||||||||||||||||||||||
Generic Dispense Rate | ||||||||||||||||||||||||||
Retail | 85.9 | % | 81.8 | % | 4.1 | % | 84.5 | % | 80.9 | % | 3.6 | % | ||||||||||||||
Employer Group | 78.1 | % | 71.8 | % | 6.3 | % | 76.3 | % | 71.0 | % | 5.3 | % | ||||||||||||||
Total | 85.0 | % | 80.6 | % | 4.4 | % | 83.6 | % | 79.7 | % | 3.9 | % | ||||||||||||||
Mail-Order Penetration | ||||||||||||||||||||||||||
Retail | 22.2 | % | 22.0 | % | 0.2 | % | 23.0 | % | 20.9 | % | 2.1 | % | ||||||||||||||
Employer Group | 14.6 | % | 15.3 | % | -0.7 | % | 15.3 | % | 15.5 | % | -0.2 | % | ||||||||||||||
Total | 21.3 | % | 21.2 | % | 0.1 | % | 22.2 | % | 20.2 | % | 2.0 | % | ||||||||||||||
Percentage | Percentage | |||||||||||||||||||||||||
Difference | Change | Difference | Change | |||||||||||||||||||||||
Script volume | ||||||||||||||||||||||||||
Retail | 54,100 | 46,500 | 7,600 | 16.3 | % | 211,600 | 181,300 | 30,300 | 16.7 | % | ||||||||||||||||
Employer Group | 7,200 | 6,300 | 900 | 14.3 | % | 26,600 | 25,000 | 1,600 | 6.4 | % | ||||||||||||||||
Total | 61,300 | 52,800 | 8,500 | 16.1 | % | 238,200 | 206,300 | 31,900 | 15.5 | % | ||||||||||||||||
S-14 |
Humana Inc. | ||||||||||||||||||||||
Membership Detail | ||||||||||||||||||||||
In thousands | ||||||||||||||||||||||
Ending |
Average |
Ending | Year-over-year Change | Ending | Sequential Change | |||||||||||||||||
December 31, 2012 |
4Q12 |
December 31, 2011 | Amount | Percent | September 30, 2012 | Amount | Percent | |||||||||||||||
Medical Membership: | ||||||||||||||||||||||
Retail | ||||||||||||||||||||||
Medicare Advantage | 1,927.6 | 1,921.8 | 1,640.3 | 287.3 | 17.5 | % | 1,911.8 | 15.8 | 0.8 | % | ||||||||||||
Medicare stand-alone PDPs | 2,985.6 | 2,973.5 | 2,540.4 | 445.2 | 17.5 | % | 2,947.2 | 38.4 | 1.3 | % | ||||||||||||
Individual commercial | 444.0 | 443.9 | 433.6 | 10.4 | 2.4 | % | 443.4 | 0.6 | 0.1 | % | ||||||||||||
Medicare Supplement | 77.4 | 76.6 | 59.6 | 17.8 | 29.9 | % | 75.2 | 2.2 | 2.9 | % | ||||||||||||
Total Retail | 5,434.6 | 5,415.8 | 4,673.9 | 760.7 | 16.3 | % | 5,377.6 | 57.0 | 1.1 | % | ||||||||||||
Employer Group | ||||||||||||||||||||||
Medicare Advantage | 370.8 | 370.0 | 290.6 | 80.2 | 27.6 | % | 367.9 | 2.9 | 0.8 | % | ||||||||||||
Medicare Advantage ASO | 27.7 | 27.7 | 27.6 | 0.1 | 0.4 | % | 27.8 | (0.1 | ) | -0.4 | % | |||||||||||
Medicare stand-alone PDPs | 4.4 | 4.4 | 4.2 | 0.2 | 4.8 | % | 4.4 | - | 0.0 | % | ||||||||||||
Fully-insured medical commercial | 1,211.8 | 1,209.5 | 1,180.2 | 31.6 | 2.7 | % | 1,204.5 | 7.3 | 0.6 | % | ||||||||||||
ASO commercial | 1,237.7 | 1,235.0 | 1,292.3 | (54.6 | ) | -4.2 | % | 1,231.1 | 6.6 | 0.5 | % | |||||||||||
Total Employer Group | 2,852.4 | 2,846.6 | 2,794.9 | 57.5 | 2.1 | % | 2,835.7 | 16.7 | 0.6 | % | ||||||||||||
Other Businesses | ||||||||||||||||||||||
Military Services | 3,123.9 | 3,127.7 | 3,028.1 | 95.8 | 3.2 | % | 3,124.6 | (0.7 | ) | 0.0 | % | |||||||||||
Medicaid and other | 610.8 | 610.0 | 614.2 | (3.4 | ) | -0.6 | % | 607.1 | 3.7 | 0.6 | % | |||||||||||
LI-NET (D) | 67.1 | 70.6 | 73.5 | (6.4 | ) | -8.7 | % | 73.9 | (6.8 | ) | -9.2 | % | ||||||||||
Total Other Businesses | 3,801.8 | 3,808.3 | 3,715.8 | 86.0 | 2.3 | % | 3,805.6 | (3.8 | ) | -0.1 | % | |||||||||||
Total Medical Membership | 12,088.8 | 12,070.7 | 11,184.6 | 904.2 | 8.1 | % | 12,018.9 | 69.9 | 0.6 | % | ||||||||||||
Specialty Membership: | ||||||||||||||||||||||
Retail | ||||||||||||||||||||||
Dental - fully-insured | 691.5 | 692.7 | 579.6 | 111.9 | 19.3 | % | 685.3 | 6.2 | 0.9 | % | ||||||||||||
Vision | 118.7 | 117.9 | 83.8 | 34.9 | 41.6 | % | 113.8 | 4.9 | 4.3 | % | ||||||||||||
Other supplemental benefits (E) | 138.5 | 139.4 | 119.1 | 19.4 | 16.3 | % | 141.7 | (3.2 | ) | -2.3 | % | |||||||||||
Total Retail | 948.7 | 950.0 | 782.5 | 166.2 | 21.2 | % | 940.8 | 7.9 | 0.8 | % | ||||||||||||
Employer Group | ||||||||||||||||||||||
Dental - fully-insured | 2,446.4 | 2,441.8 | 2,283.9 | 162.5 | 7.1 | % | 2,431.0 | 15.4 | 0.6 | % | ||||||||||||
Dental - ASO | 868.3 | 866.5 | 869.9 | (1.6 | ) | -0.2 | % | 863.1 | 5.2 | 0.6 | % | |||||||||||
Vision | 2,525.0 | 2,523.0 | 2,329.6 | 195.4 | 8.4 | % | 2,515.5 | 9.5 | 0.4 | % | ||||||||||||
Other supplemental benefits (E) | 1,296.5 | 1,295.3 | 1,049.2 | 247.3 | 23.6 | % | 1,279.0 | 17.5 | 1.4 | % | ||||||||||||
Total Employer Group | 7,136.2 | 7,126.6 | 6,532.6 | 603.6 | 9.2 | % | 7,088.6 | 47.6 | 0.7 | % | ||||||||||||
Total Specialty Membership | 8,084.9 | 8,076.6 | 7,315.1 | 769.8 | 10.5 | % | 8,029.4 | 55.5 | 0.7 | % | ||||||||||||
S-15 |
Humana Inc. | ||||||||||||||||||||||
Premiums and Services Revenue Detail | ||||||||||||||||||||||
Dollars in millions, except per member per month | ||||||||||||||||||||||
Per Member per Month (F) | ||||||||||||||||||||||
Three Months Ended December 31, | Three Months Ended December 31, | |||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||
2012 | 2011 | Change | Change | 2012 | 2011 | |||||||||||||||||
Premiums and Services Revenue | ||||||||||||||||||||||
Retail: | ||||||||||||||||||||||
Medicare Advantage | $ | 5,184 | $ | 4,454 | $ | 730 | 16.4 | % | $ | 899 | $ | 916 | ||||||||||
Medicare stand-alone PDPs | 620 | 580 | 40 | 6.9 | % | 70 | 77 | |||||||||||||||
Individual commercial | 216 | 205 | 11 | 5.4 | % | 162 | 159 | |||||||||||||||
Medicare Supplemental | 39 | 28 | 11 | 39.3 | % | 170 | 160 | |||||||||||||||
Specialty | 46 | 35 | 11 | 31.4 | % | 16 | 15 | |||||||||||||||
ASO & other services (B) | 7 | 4 | 3 | 75.0 | % | |||||||||||||||||
Total Retail | 6,112 | 5,306 | 806 | 15.2 | % | |||||||||||||||||
Employer Group: | ||||||||||||||||||||||
Medicare Advantage | 1,005 | 789 | 216 | 27.4 | % | 905 | 907 | |||||||||||||||
Medicare stand-alone PDPs | 2 | 2 | - | 0.0 | % | |||||||||||||||||
Fully-insured medical commercial | 1,251 | 1,181 | 70 | 5.9 | % | 345 | 334 | |||||||||||||||
Specialty | 277 | 237 | 40 | 16.9 | % | 15 | 14 | |||||||||||||||
ASO & other services (B) | 96 | 91 | 5 | 5.5 | % | |||||||||||||||||
Total Employer Group | 2,631 | 2,300 | 331 | 14.4 | % | |||||||||||||||||
Health and Well-Being Services: | ||||||||||||||||||||||
Pharmacy solutions | 2,832 | 2,550 | 282 | 11.1 | % | |||||||||||||||||
Provider services | 297 | 268 | 29 | 10.8 | % | |||||||||||||||||
Home care services | 67 | 29 | 38 | 131.0 | % | |||||||||||||||||
Integrated wellness services | 68 | 53 | 15 | 28.3 | % | |||||||||||||||||
Total Health and Well-Being Services | 3,264 | 2,900 | 364 | 12.6 | % | |||||||||||||||||
Other Businesses: | ||||||||||||||||||||||
Military services (G) | 97 | 821 | (724 | ) | -88.2 | % | ||||||||||||||||
LI-NET (D) | 63 | 57 | 6 | 10.5 | % | 297 | 257 | |||||||||||||||
Medicaid and other (H) | 280 | 258 | 22 | 8.5 | % | 145 | 138 | |||||||||||||||
Total Other Businesses | $ | 440 | $ | 1,136 | $ | (696 | ) | -61.3 | % | |||||||||||||
S-16 |
Humana Inc. | ||||||||||||||||||||||
Premiums and Services Revenue Detail | ||||||||||||||||||||||
Dollars in millions, except per member per month | ||||||||||||||||||||||
Per Member per Month (F) | ||||||||||||||||||||||
Twelve Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||
2012 | 2011 | Change | Change | 2012 | 2011 | |||||||||||||||||
Premiums and Services Revenue | ||||||||||||||||||||||
Retail: | ||||||||||||||||||||||
Medicare Advantage | $ | 20,788 | $ | 18,100 | $ | 2,688 | 14.9 | % | $ | 917 | $ | 939 | ||||||||||
Medicare stand-alone PDPs | 2,587 | 2,317 | 270 | 11.7 | % | 74 | 80 | |||||||||||||||
Individual commercial | 861 | 757 | 104 | 13.7 | % | 162 | 156 | |||||||||||||||
Medicare Supplemental | 143 | 104 | 39 | 37.5 | % | 166 | 161 | |||||||||||||||
Specialty | 171 | 124 | 47 | 37.9 | % | 16 | 15 | |||||||||||||||
ASO & other services (B) | 26 | 16 | 10 | 62.5 | % | |||||||||||||||||
Total Retail | 24,576 | 21,418 | 3,158 | 14.7 | % | |||||||||||||||||
Employer Group: | ||||||||||||||||||||||
Medicare Advantage | 4,064 | 3,152 | 912 | 28.9 | % | 932 | 923 | |||||||||||||||
Medicare stand-alone PDPs | 8 | 8 | - | 0.0 | % | |||||||||||||||||
Fully-insured medical commercial | 4,996 | 4,782 | 214 | 4.5 | % | 348 | 338 | |||||||||||||||
Specialty | 1,070 | 935 | 135 | 14.4 | % | 15 | 14 | |||||||||||||||
ASO & other services (B) | 373 | 370 | 3 | 0.8 | % | |||||||||||||||||
Total Employer Group | 10,511 | 9,247 | 1,264 | 13.7 | % | |||||||||||||||||
Health and Well-Being Services: | ||||||||||||||||||||||
Pharmacy solutions | 11,368 | 9,897 | 1,471 | 14.9 | % | |||||||||||||||||
Provider services | 1,181 | 1,065 | 116 | 10.9 | % | |||||||||||||||||
Home care services | 207 | 84 | 123 | 146.4 | % | |||||||||||||||||
Integrated wellness services | 232 | 187 | 45 | 24.1 | % | |||||||||||||||||
Total Health and Well-Being Services | 12,988 | 11,233 | 1,755 | 15.6 | % | |||||||||||||||||
Other Businesses: | ||||||||||||||||||||||
Military services (G) | 1,288 | 3,690 | (2,402 | ) | -65.1 | % | ||||||||||||||||
LI-NET (D) | 266 | 253 | 13 | 5.1 | % | 304 | 247 | |||||||||||||||
Medicaid and other (H) | 1,075 | 969 | 106 | 10.9 | % | 143 | 129 | |||||||||||||||
Total Other Businesses | $ | 2,629 | $ | 4,912 | $ | (2,283 | ) | -46.5 | % | |||||||||||||
S-17 |
Humana Inc. | |||||||||||||||||||||||
Medicare Summary | |||||||||||||||||||||||
Premiums in millions | |||||||||||||||||||||||
Membership in thousands | |||||||||||||||||||||||
Per Member per Month (F) | |||||||||||||||||||||||
Three Months Ended December 31, | Year-over-year Change | Three Months Ended December 31, | |||||||||||||||||||||
2012 | 2011 | Amount | Percent | 2012 |
|
2011 |
|||||||||||||||||
Premiums | |||||||||||||||||||||||
Medicare Advantage | $ | 6,189 | $ | 5,243 | $ | 946 | 18.0 | % | $ | 900 | $ | 914 | |||||||||||
Medicare stand-alone PDPs | 685 | 639 | 46 | 7.2 | % | 75 |
|
2 | |||||||||||||||
Total Medicare | $ | 6,874 | $ | 5,882 | $ | 992 | 16.9 | % | |||||||||||||||
Per Member per Month (F) | |||||||||||||||||||||||
Twelve Months Ended December 31, | Year-over-year Change | Twelve Months Ended December 31, | |||||||||||||||||||||
2012 | 2011 | Amount | Percent | 2012 |
|
2011 |
|||||||||||||||||
Premiums | |||||||||||||||||||||||
Medicare Advantage | $ | 24,852 | $ | 21,252 | $ | 3,600 | 16.9 | % | $ | 919 | $ | 937 | |||||||||||
Medicare stand-alone PDPs | 2,861 | 2,578 | 283 | 11.0 | % | 80 | 86 | ||||||||||||||||
Total Medicare | $ | 27,713 | $ | 23,830 | $ | 3,883 | 16.3 | % | |||||||||||||||
Ending | Ending | Year-over-year Change | |||||||||||||||||||||
December 31, 2012 | December 31, 2011 | Amount | Percent | ||||||||||||||||||||
Fully-Insured Membership | |||||||||||||||||||||||
Medicare Advantage | 2,298.4 | 1,930.9 | 367.5 | 19.0 | % | ||||||||||||||||||
Medicare stand-alone PDPs | 3,057.1 | 2,618.1 | 439.0 | 16.8 | % | ||||||||||||||||||
Total Medicare | 5,355.5 | 4,549.0 | 806.5 | 17.7 | % | ||||||||||||||||||
Member Mix | |||||||||||||||||||||||
Ending | Ending | December 31 | December 31 | ||||||||||||||||||||
Retail Segment Detail | December 31, 2012 | December 31, 2011 | 2012 | 2011 | |||||||||||||||||||
Medicare Advantage Membership | |||||||||||||||||||||||
HMO | 935.8 | 715.3 | 48.5 | % | 43.6 | % | |||||||||||||||||
PPO | 991.8 | 925.0 | 51.5 | % | 56.4 | % | |||||||||||||||||
Total Individual Medicare | 1,927.6 | 1,640.3 | 100.0 | % | 100.0 | % | |||||||||||||||||
Medicare Advantage Membership | |||||||||||||||||||||||
Risk | 511.7 | 429.1 | 26.5 | % | 26.1 | % | |||||||||||||||||
Path-to-Risk | 363.9 | 199.4 | 18.9 | % | 12.2 | % | |||||||||||||||||
Other | 1,052.0 | 1,011.8 | 54.6 | % | 61.7 | % | |||||||||||||||||
Total Individual Medicare | 1,927.6 | 1,640.3 | 100.0 | % | 99.9 | % | |||||||||||||||||
S-18 |
Humana Inc. | Fair value | |||||||||||
Investments | ||||||||||||
Dollars in millions | ||||||||||||
12/31/2012 | 9/30/2012 | 12/31/2011 | ||||||||||
Investment Portfolio: | ||||||||||||
Cash & cash equivalents | $ | 1,306 | $ | 1,363 | $ | 1,377 | ||||||
Investment securities | 8,001 | 8,058 | 7,743 | |||||||||
Long-term investments | 1,846 | 1,837 | 1,710 | |||||||||
Total investment portfolio | $ | 11,153 | $ | 11,258 | $ | 10,830 | ||||||
Duration (I) | 4.02 | 3.89 | 3.94 | |||||||||
Average Credit Rating |
|
AA- |
|
AA- |
|
AA- |
||||||
Investment Portfolio Detail: | ||||||||||||
Cash and cash equivalents | $ | 1,306 | $ | 1,363 | $ | 1,377 | ||||||
U.S. Government and agency obligations | ||||||||||||
U.S. Treasury and agency obligations | 618 | 563 | 725 | |||||||||
U.S. Government residential mortgage-backed | 1,569 | 1,908 | 1,751 | |||||||||
U.S. Government commercial mortgage-backed | 34 | 34 | 33 | |||||||||
Total U.S. Government and agency obligations | 2,221 | 2,505 | 2,509 | |||||||||
Tax-exempt municipal securities | ||||||||||||
Pre-refunded | 311 | 286 | 332 | |||||||||
Insured | 627 | 618 | 634 | |||||||||
Other | 2,120 | 1,961 | 1,874 | |||||||||
Auction rate securities | 13 | 13 | 16 | |||||||||
Total tax-exempt municipal securities | 3,071 | 2,878 | 2,856 | |||||||||
Residential mortgage-backed | ||||||||||||
Prime residential mortgages | 32 | 34 | 41 | |||||||||
Alt-A residential mortgages | 1 | 1 | 2 | |||||||||
Sub-prime residential mortgages | 1 | 1 | 1 | |||||||||
Total residential mortgage-backed | 34 | 36 | 44 | |||||||||
Commercial mortgage-backed | 659 | 658 | 381 | |||||||||
Asset-backed securities | 68 | 37 | 83 | |||||||||
Corporate securities | ||||||||||||
Financial services | 864 | 853 | 692 | |||||||||
Other | 2,930 | 2,928 | 2,888 | |||||||||
Total corporate securities | 3,794 | 3,781 | 3,580 | |||||||||
Total investment portfolio | $ | 11,153 | $ | 11,258 | $ | 10,830 | ||||||
S-19 |
Humana Inc. | |||||||||||||
Detail of Benefits Payable Balance and Year-to-Date Changes | |||||||||||||
Dollars in millions | |||||||||||||
December 31, | September 30, | December 31, | |||||||||||
2012 | 2012 | 2011 | |||||||||||
Detail of benefits payable | |||||||||||||
IBNR and other benefits payable (J) | $ | 3,158 | $ | 3,097 | $ | 2,759 | |||||||
Unprocessed claim inventories (K) | 302 | 380 | 280 | ||||||||||
Processed claim inventories (L) | 230 | 339 | 209 | ||||||||||
Payable to pharmacy benefit administrator (M) | 85 | 127 | 167 | ||||||||||
Benefits payable, excluding military services | 3,775 | 3,943 | 3,415 | ||||||||||
Military services benefits payable (N) | 4 | 15 | 339 | ||||||||||
Total Benefits Payable | $ | 3,779 | $ | 3,958 | $ | 3,754 | |||||||
Twelve Months Ended | Nine Months Ended | Year Ended | |||||||||||
December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||||||
Year-to-date changes in benefits payable, | |||||||||||||
excluding military services (O) | |||||||||||||
Balances at January 1 | $ | 3,415 | $ | 3,415 | $ | 3,214 | |||||||
Acquisitions | 66 | 73 | 29 | ||||||||||
Incurred related to: | |||||||||||||
Current year | 30,198 | 22,708 | 25,834 | ||||||||||
Prior years (P) | (257 | ) | (235 | ) | (372 | ) | |||||||
Total incurred | 29,941 | 22,473 | 25,462 | ||||||||||
Paid related to: | |||||||||||||
Current year | (26,738 | ) | (19,193 | ) | (22,742 | ) | |||||||
Prior years | (2,909 | ) | (2,825 | ) | (2,548 | ) | |||||||
Total paid | (29,647 | ) | (22,018 | ) | (25,290 | ) | |||||||
Balances at end of period | $ | 3,775 | $ | 3,943 | $ | 3,415 | |||||||
Twelve Months Ended | Nine Months Ended | Year Ended | |||||||||||
December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||||||
Summary of Consolidated Benefit Expense: | |||||||||||||
Total benefit expense incurred, per above | $ | 29,941 | $ | 22,473 | $ | 25,462 | |||||||
Military services benefit expense | 908 | 908 | 3,247 | ||||||||||
Future policy benefit expense (Q) | 136 | 88 | 114 | ||||||||||
Consolidated Benefit Expense | $ | 30,985 | $ | 23,469 | $ | 28,823 | |||||||
S-20 |
Humana Inc. | ||||||||||||
Benefits Payable Statistics (R) | ||||||||||||
Receipt Cycle Time (S) | ||||||||||||
2012 | 2011 | Change | Percentage Change | |||||||||
1st Quarter Average | 13.0 | 13.8 | (0.8 | ) | -5.8 | % | ||||||
2nd Quarter Average | 13.7 | 13.8 | (0.1 | ) | -0.7 | % | ||||||
3rd Quarter Average | 13.0 | 13.6 | (0.6 | ) | -4.4 | % | ||||||
4th Quarter Average | 12.8 | 14.0 | (1.2 | ) | -8.6 | % | ||||||
Full Year Average | 13.1 | 13.8 | (0.7 | ) | -5.1 | % | ||||||
Unprocessed Claims Inventories | ||||||||||||
Date |
Estimated Valuation (millions) |
Claim Item Counts (000s) |
Number of Days on Hand |
|||||||||
12/31/2010 | $ | 374 | 981 | 5.0 | ||||||||
3/31/2011 | $ | 482 | 1,197 | 6.0 | ||||||||
6/30/2011 | $ | 410 | 1,093 | 5.1 | ||||||||
9/30/2011 | $ | 419 | 1,272 | 5.7 | ||||||||
12/31/2011 | $ | 280 | 599 | 2.8 | ||||||||
3/31/2012 | $ | 376 | 1,028 | 4.2 | ||||||||
6/30/2012 | $ | 310 | 1,077 | 4.2 | ||||||||
9/30/2012 | $ | 380 | 1,440 | 5.7 | ||||||||
12/31/2012 | $ | 302 | 1,061 | 4.1 | ||||||||
S-21 |
Humana Inc. | ||||||||||||
Benefits Payable Statistics (Continued) (R) | ||||||||||||
Days in Claims Payable (T) | ||||||||||||
Quarter Ended |
Days in Claims Payable (DCP) |
Change Last 4 Quarters |
Percentage Change |
|||||||||
12/31/2010 | 53.5 | (1.9 | ) | -3.4 | % | |||||||
3/31/2011 | 55.5 | 1.3 | 2.4 | % | ||||||||
6/30/2011 | 56.0 | (1.0 | ) | -1.8 | % | |||||||
9/30/2011 | 54.2 | (3.6 | ) | -6.2 | % | |||||||
12/31/2011 | 52.5 | (1.0 | ) | -1.9 | % | |||||||
3/31/2012 | 50.1 | (5.4 | ) | -9.7 | % | |||||||
6/30/2012 | 51.0 | (5.0 | ) | -8.9 | % | |||||||
9/30/2012 | 51.6 | (2.6 | ) | -4.8 | % | |||||||
12/31/2012 | 48.5 | (4.0 | ) | -7.6 | % | |||||||
Year-to-Date Change in Days in Claims Payable (U) | ||||||||||||
2012 | 2011 | |||||||||||
DCP - beginning of period | 52.5 | 53.5 | ||||||||||
Components of change in DCP: | ||||||||||||
Change in unprocessed claims inventories | (0.1 | ) | (2.3 | ) | ||||||||
Change in processed claims inventories | 0.3 | 1.4 | ||||||||||
Change in pharmacy payment cutoff | (0.1 | ) | 0.6 | |||||||||
Change in capitation/provider settlements | (4.3 | ) | (0.7 | ) | ||||||||
All other | 0.2 | |||||||||||
DCP - end of period | 48.5 | 52.5 | ||||||||||
S-22 |
Humana Inc.
Footnotes to Statistical Schedules and Supplementary Information 4Q12 Earnings Release |
(A) The Medicaid and other category includes the company’s Medicaid business as well as the closed block of long-term care. |
(B) The ASO and other category is primarily comprised of ASO fees and other ancillary services fees. |
(C) The operating cost ratio is defined as operating costs as a percent of total revenues excluding investment income. |
(D) LI-NET is the CMS Limited Income Newly Eligible Transition program, operated by Humana, to provide Part D prescription drug coverage for all uncovered Full Duals and SSI-only |
beneficiaries on a retroactive basis and all uncovered LIS eligible beneficiaries on a current basis. |
(E) Other supplemental benefits include life, disability, and fixed benefit products including cancer and critical illness policies. |
(F) Computed based on average membership for the period (i.e., monthly ending membership during the period divided by the number of months in the period). |
(G) Military services revenues are generally not contracted on a per-member basis. |
(H) Includes premiums associated with Medicaid and the closed block of long-term care as well as services revenue. |
(I) Duration is the time-weighted average of the present value of the fixed income portfolio cash flows. |
(J) IBNR represents an estimate of benefits expense payable for claims incurred but not reported (IBNR) at the balance sheet date. The level of IBNR is primarily impacted by |
membership levels, benefit claim trends and the receipt cycle time, which represents the length of time between when a claim is initially incurred and when the claim form is |
received (i.e. a shorter time span results in lower reserves for claims IBNR). Other benefits payable includes amounts payable to providers under capitation arrangements. |
(K) Unprocessed claim inventories represent the estimated valuation of claims received but not yet fully processed. |
(L) Processed claim inventories represent the estimated valuation of processed claims that are in the post-claim-adjudication process, which consists of operating functions such |
as audit and check batching and handling. |
(M) The balance due to the company's pharmacy benefit administrator fluctuates as a result of the number of business days in the last payment cycle of the month. Payment cycles |
are every 8 days (8(th), 16(th), and 24th of month) and the last day of the month. |
(N) Military services benefits payable primarily consist of IBNR and to a lesser extent risk share payables to the Department of Defense and liabilities to subcontractors. |
(O) The table excludes activity associated with military services benefits payable because the federal government bears a substantial portion of the risk associated with financing |
the cost of health benefits. More specifically, the risk-sharing provisions of the military services contracts with the federal government and with subcontractors effectively |
limit profits and losses when actual claim experience varies from the targeted claim amount negotiated annually. As a result of these contract provisions, the impact of changes |
in estimates for prior year military services benefits payable are substantially offset by the associated changes in estimates of revenue from health care services |
reimbursements. As such, any impact on the company's results of operations is reduced substantially, whether positive or negative. |
(P) Amounts incurred related to prior years vary from previously estimated liabilities as the claims ultimately are settled. Negative amounts reported for incurred related to |
prior years result from claims being ultimately settled for amounts less than originally estimated (favorable development). There were no changes in the approach used to |
determine the company's estimate of medical claim reserves during the quarter. |
(Q) Future policy benefit expense has a related liability classified as a long-term liability on the balance sheet. |
(R) Benefits reserves statistics represents fully-insured medical claims data and excludes military services claims data and specialty benefits. |
(S) The receipt cycle time measures the average length of time between when a claim was initially incurred and when the claim form was received. Receipt cycle time data for the |
company's largest claim processing platforms represent approximately 94% of the company's fully-insured medical claims volume. Pharmacy and specialty claims, including dental, |
vision and other supplemental benefits, are excluded from this measurement. |
(T) A common metric for monitoring benefits payable levels relative to the benefit expense is days in claims payable, or DCP, which represents the benefits payable at the end of |
the period divided by average benefits expense per day in the quarterly period. |
(U) DCP fluctuates due to a number of issues, the more significant of which are detailed in this roll forward. Growth in certain product lines can also impact DCP for the quarter |
since a provision for claims would not have been recorded for members that had not yet enrolled earlier in the quarter, yet those members would have a provision and corresponding |
medical claims reserve recorded upon enrollment later in the quarter. This analysis excludes the impact of military services and Medicare stand-alone PDPs upon DCP. |
S-23 |
CONTACT:
Humana Inc.
Investor Relations:
Regina Nethery,
502-580-3644
Rnethery@humana.com
or
Corporate
Communications:
Tom Noland, 502-580-3674
Tnoland@humana.com
http://www.humana.com